The Federal Trade Commission (FTC) has announced a final rule prohibiting companies from creating fake online reviews and testimonials to protect consumers from fraud.

This regulation aims to promote fair and honest competition in product and service reviews, addressing deceptive practices that have proliferated, especially with the rise of generative AI.

Key provisions of the rule include a ban on fake reviews from non-existent individuals, AI-generated reviews, and those written by individuals without actual experience of the product.

Additionally, businesses are prohibited from providing compensation or incentives for writing reviews that express a specific sentiment, whether positive or negative.

The FTC's ruling also prohibits companies from intimidating individuals to prevent or remove negative reviews through threats or false accusations.

Violators of these new rules could face significant penalties, with fines potentially reaching up to $50,000 per violation.

The rule was approved unanimously with a 5-to-0 vote and will be enforced 60 days after its publication in the Federal Register.

FTC Chair Lina M. Khan emphasized that fake reviews waste consumers' time and money, harm the marketplace, and take business from honest competitors.

The FTC aims to enhance the reliability of online reviews, particularly on platforms like Amazon, which has faced ongoing issues with fake reviews.

Once implemented, the new rules will allow the FTC to seek civil penalties against violators, enhancing accountability in the marketplace.

This regulation could also impact streamers who engage in view botting, as it addresses deceptive practices that inflate viewership numbers.

The FTC has previously taken action against companies for fake reviews, including notable cases against The Bountiful Company and Sunday Riley for review manipulation.